Freight Forwarders and Common Carriage

Fordham Law Review Volume 15 Issue 2 Article 4 1946 Freight Forwarders and Common Carriage Daniel J. Ahearn Follow this and additional works at: https://ir.lawnet.fordham.edu/flr Part of the Law Commons Recommended Citation Daniel J. Ahearn, Freight Forwarders and Common Carriage, 15 Fordham L. Rev. 248 (1946). Available at: https://ir.lawnet.fordham.edu/flr/vol15/iss2/4 This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Law Review by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact [email protected]. FREIGHT FORWARDERS AND COMMON CARRIAGE DANIEL J. AHEARN PUBLIC transportation of goods has always employed the best means available in its time to satisfy the demands of its time for speed and economy. Speed and economy are, of course, relative terms and the emphasis on the one or the other varies not only between but within industries. Even today the plane with its cargo of orchids casts a brief shadow on the cement-laden barge idling along as did its predecessors in DeWitt Clinton's day. Since transportation costs are part of the total cost of goods, every shipper seeks that particular blend of speed and economy which will best permit him to compete in the nation's markets. Science has continuously stepped up the speed and efficiency of transportation. Looking back at the pageant of American transportation we see how hydraulic canal locks, transcontinental rail lines, twenty ton highway tractor-trailers, and cargo planes have multiplied the "means available". Of equal importance with the accomplishments of science have been the ingenuity and imagination with which the means available have been put to practical use. The spectacular but short-lived pony express is one example; the express companies originating about 1839 are another. In that year one William F. Harnden contracted with the New Jersey Steam Navigation Company for the transportation on its ships between New York and Providence of one "wooden crate .. five feet by five feet in width and height and six feet in length, (con- tents unknown)".' Harnden then solicited the transportation of small packages, placed them in the wooden crate, and assumed all the risks of carriage. Current issues of a nationally known business weekly furnish two illustrations of similar attempts in our own day to employ the "best means available". One number2 reports the issuance of an Interstate Commerce Commission certificate to a company which will operate con- verted LCT and LSM landing craft, each carrying a number of 12- wheeled trailers between ports on the Gulf of Mexico. Under the title "Forwarding by Air", a later issue3 describes a company which will "find cargoes and ship them" in planes of independent non-scheduled oper- ators. The use in this magazine article of the phrase "freight forwarder- 1. Express Cases, 117 U. S. 1, 19 (1885). Harnden also leased space on a railroad car running from Boston to New York "... and vice versa, via Stonington . Id. at 18. 2. BUSINESS WEEK, June 8, 1946, 36. 3. BusiNEss WEEK, July 27, 1946, 42. 248 1946] FREIGHT FORWARDERS by air" to describe a person who is said to collect a "brokerage fee" for his services emphasizes the importance of what will be said here- after under the heading "A Problem in Semantics". Brief reference to another comparatively recent attempt to employ the "best means available" will serve to point up our subject. In New Automobiles in Interstate Commerce,4 the Maritime Commission was called upon to consider the "status of the Western Transit Company. The company held itself out to transport automobiles between Detroit, Michigan and Buffalo, New York on the deck space, otherwise wasted, of Lake vessels operated by bulk cargo carriers. The Commission held the Western Transit Company to be a common carrier by water subject to its regulation even though the bulk cargo carriers were not themselves subject as carriers under the Shipping Act of 1916. This last illustration is an example of an "overriding carrier", i.e. a carrier which employs the facilities and vehicles of other carriers in the transportation it per- forms. The air cargo operation described above, despite the magazine writers' use of the term "freight forwarder-by air", does not seem, on the basis of the activity described, to constitute carriage at all. However, if there are other unstated facts which would add up to carriage, it too would be an overriding carrier inasmuch as it employs the planes of other carriers. Every transportation innovation poses legal problems for attorneys, for the judiciary, and for legislators. First, there is the all important question of common carrier status. In the case of overriding carriers, there are further questions about the legal relationships among the parties -the shipper, the overriding carrier, and the underlying carrier. Finally, should the new method of transportation fill a basic economic need and become a vital link in the nation's transportation system, the question of the necessity for federal regulation eventually arises. Properly to resolve the legal problems incident to new methods of transportation and apply the precedents call at times for the skills of both the philosopher and the frontiersman. The answer to many of these problems lies in the concept of common carriage. The difficulty is to apply that concept to particular instances, and in so doing to distinguish the accidental from the essential. In addition, one must occasionally hack throigh a heavy terminological undergrowth which has sprung up from the un- fortunate or careless use of words. This is particularly true of cases dealing with freight forwarders, which, together with the express com- 4. 2 U. S. M. C. 359, No. 511, 1940. 5. 39 STAT. 728 (1916), 46 U. S. C. A. § 801 (1944). FORDHAM LAW REVIEW [Vrol. is panies, G are the two most important types of overriding carriers. Both were regarded as innovations at one time. Freight forwarder history, more than that of express companies, will furnish examples of the legal issues incident to new methods of transportation. A century ago there were freight forwarders-although they were not then called by that name. It was not, however, until after World War I that they began to make themselves felt competitively in American transportation. How important they eventually became may be judged by the fact that in recent years Congress decided that they too should be regulated in much the same way as are railroads, motor carriers, and water carriers. Thus, the main legal problems the freight forwarders encountered should be of interest to those transportation agencies which have recently come into operation. But, first, let us see what the freight forwarder is and does. Freight forwarders receive for transportation many less-carload and less-truckload shipments for each of' which they issue a bill of lading7 to the shipper. The individual shipments may originate in the city in which the freight forwarder operates its receiving and consolidating station, or they may have to be brought one hundred miles or more to the forwarder's station, usually by motor common carrier. At its consolidating station the freight forwarder segregates and consolidates the individual small shipments into large lots on which carload, truckload, or other quantity rates apply-each consolidated consignment destined by rail, truck or boat to a different large destination city.' At the destination cities the consolidated consignments are broken down into indi- 6. Today there is only a single express company, the Railway Express Agency, which is owned jointly by some eighty-six railroads. This express monopoly has been operative since 1928 at which time the railroad group bought up the independent express companies-such as Adams Express, American Express, U. S. Express, etc. Some of these names survive as traveler's check banking institutions, as travel bureaus, and in other occupations, but none is engaged in the express transportation of goods. For the purpose of understanding the issues discussed in this article, however, it is important to keep in mind that the express companies involved in the leading cases are the old independent companies, which flourished from the time of the 1830's and which were brought under Federal regulation as common carriers by the Hepburn amendment of 1906. 34 STAT. 584 (1906), 49 U. S. C. A. § 1 (1944). Where reference is made in this article to express companies it is the independent type not the present Railway Express Agency which is meant. 7. The form used is the Uniform Railroad Bill of Lading. 39 STAT. 538 (1916), 49 U. S. C. A. § 81 (1944). 8. Some freight forwarders have already applied to the Civil Aeronautics Board for authority to operate as freight forwarders by air under the Civil Aeronautics Act. 52 STAT. 973 (1938), 49 U. S. C. A. § 681 (1944). 1946] FREIGHT FORWARDERS vidual shipments again. The individual shipments are then delivered to the premises of the various consignees, whether they' be located in the destination city at which the consolidated consignment is broken down or in smaller communities two hundred miles or more beyond. The forwarder's through bill of lading applies all the way from the shipper's premises to those of the consignee. The shipper pays the freight forwarder one through charge for the entire transportation. Since the forwarders through rates approximate those for rail less-carload service, the forwarder's operating revenue is derived from the difference between the through less-carload rate it charges the public and the carload, truckload or other quantity rate, it pays the railroad, motor carrier or boat line.

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